|
| It might be worth considering a purchase of a $3.40 DEC 14 Corn Call for a cost of $.06 to protect the current revenue price vs. the original price of $4.62. $3.40 + $.06 = $3.46 vs. $4.62 = $1.16 potential gain. Not likely that we will rally back anywhere close to $4.62 during October but if the FSA reported acres with historical adjustments are accurate, we could see planted acres fall to 88.0 to 89.0 million acres which even with a 172.5 yield would cause production in the 13.900 to 14.050 billion bushel area using a 91.5% harvested level. If this gets reported in the October report and/or we see a surprise in the September 30th stocks report this could be a worthwhile investment of a small amount of money with no margin call risk.
Some may also want to look at buying a NOV 14 $9.90 Soybean Call for a cost of $.05 which is $9.95 vs. the $11.36 initial Revenue Price. Again this is a potential gain of $1.41 if prices for some un-expectecd reason rally sharply from here - again not what I am looking for but you never know.
With just 7% of the corn harvested as of 9-21 and 3% of the soybeans harvested, it may be too early to put a stamp on a guarantee of a higher U.S. corn and soybean yield than those shown in the September crop report. I do realize and believe that a lot of the early harvest yields are very good and many are records but over 40% of the corn production and around 25% of the soybean production is from areas that saw varying degrees of crop stress and/or potential freeze damage. None of these areas had much - if any - harvest completed as of 9-21.
Just some thoughts. | |
|
RE: Revenue Fall Pricing Protection
